Eileen Heisman: Hi! I am Eileen Heisman, President and CEO of National Philanthropic Trust. Today I am going to discuss how to recommend grants from your Donor-Advised Fund.
When you establish a Donor-Advised Fund, you do it because you want to support causes that are important to you, but it is important to note that donors may only recommend grants to their favorite charities. It is the sponsoring charity's duty to perform due diligence and make sure the charity you requested is eligible to receive a grant. The final authority on grant making rests with the sponsoring charity, not the donors. In practice, most grant recommendations to eligible charities are approved. If they are not, fund sponsors usually suggest alternatives that fulfill a same or similar mission. Fund sponsors cannot make grants to individuals or private foundations. Donors can also not receive any services or benefits in exchange for a grant. This means that you cannot use a Donor-Advised Fund to purchase tickets to an event, buy an item at a charity auction, fund tuition, or fulfill a preexisting pledge. Donor-Advised Funds offer you great flexibility in timing your grants. You receive an immediate tax deduction when you contribute to your fund but you can wait to recommend grants until you are ready. This flexibility also allows donors to think of their Donor-Advised Fund as a charitable savings account. You can build up the assets in your fund so you can make larger gifts at a later date. Different fund sponsors have different requirements for minimum grant making, be sure to check the charity's rules for grant making. Many fund sponsors can execute complex or specialized grants. For example, grants can reoccur on a monthly or annual basis. Some donors opt to create matching or challenge grants. Oftentimes employers have a matching grant program to encourage their employees' philanthropy. You should check with your employer to see if a matching grant program can increase the assets in your Donor-Advised Fund. If they do, you can make a bigger impact on the charities you recommend to receive a grant.